It Must Always Be True That If Regulator Forces a Natural

question 17

Multiple Choice

It must always be true that if regulator forces a natural monopolist to produce where __________,the firm will earn __________.

• A) MR = MC;an economic profit
• B) MR = MC;an economic loss
• C) P = MC;zero economic profit
• D) P = MC;an economic loss
• E) P = AC;an economic loss

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Definitions:

Productive Efficiency

A situation where the economy or an economic system operates in a way that it cannot produce more of one good without affecting the production of another good.

Voting Paradox

The voting paradox, or Condorcet paradox, illustrates a situation in a voting system where collective preferences can be cyclic, even if the individual preferences are non-cyclical.

Voter Failure

A situation where voters make an uninformed or poor choice, often due to lack of information or misleading information, that does not align with their interests.

Negative Externalities

Costs or disadvantages suffered by a third party due to an economic transaction that they are not directly involved in.